EuroWire September 2016

Transatlantic Cable

4 Better safety nets and less inequality. Aspiring entrepreneurs know that in most European countries failure does not mean lost access to health care and education. They are also probably familiar with the GINI Index, the most widely accepted measure of income inequality. (The lower the number, the better.) Europe-wide, the GINI Index was 30.9 in 2014 and has been approximately the same for the past ten years. The GINI Index is 41 in the USA, where income inequality has risen over the past decade. 5 The USA has already lost its leadership in key benchmarks of innovation. By several objective measures of regional, national and local innovation, the EU already has taken the lead. For example, the Global Innovation Index, conducted by Cornell University (Ithaca, New York) and the INSEAD Business School (Fontainebleau, France), is an annual ranking at the national level. The 2015 Index, which assesses 79 indicators of a country’s innovative capability and actual results, shows eight European countries in the top ten. The top four countries are European, with the USA coming in fth place. The Innovation Cities Index assesses 162 indicators of urban innovation. The top 20 rankings for 2015 include eight European cities, ve USA cities. 6 The EU may never lead in venture capital investment. Does it matter? In Dr Cohen’s opinion, venture capital “is way less important to entrepreneurship than it used to be,” as the explosion in cloud computing, open-source software and hardware, crowd lending, crowd funding and angel networks enable entrepreneurs across a broader spectrum to experiment and leverage lean start-up principles to innovate cheaply. Key insights from recent research by the Kau man Foundation [which fosters pro-entrepreneurship policies]: less than ve per cent of start-up funding came from venture capitalists last year; only 6.5 per cent of fast-growth start-ups obtained venture capital nancing. 7 It is easier to be an entrepreneurial immigrant in Europe. The EU is well ahead of the USA on this important topic. Even as the region struggles to absorb an in ux of refugee immigrants, it has been making it easier for entrepreneurial immigrants to obtain visas while the USA is making it harder. If the creative class is highly mobile (and studies show that it is), then countries and cities that facilitate that immigration will have signi cant future advantages in attracting and recruiting entrepreneurs.

Innovation

The USA is perceived as global leader in entrepreneurship, but it may be handing o to Europe – and soon

“These trends are reshaping the geography of innovation. And as these changes transform our cities, I believe Europe will replace North America as the start-up hub of the world.” The trends that led urban strategist Boyd Cohen, PhD, to that conclusion were set out in Fast Company in June. They re ect his view that, in Europe, the forces of urbanisation, collaboration and democratisation are converging in ways that will lead it to eclipse the USA as the dominant force in modern entrepreneurship. With an emphasis on the city, with its collaborative business models and sharing economy, Dr Cohen identi ed speci c elements favouring Europe’s coming pre-eminence. (“Seven Reasons Why European Cities Are Going to Beat US Cities as Hubs for Innovation,” 16 th June). Brie y stated, they are: 1 Better-designed cities. Mercer [the world’s largest human resources consulting rm, headquartered in New York] utilises ten quality-of-life factors including economy, education, health care, housing and natural environment to compare hundreds of cities around the globe. Seven of the rst ten spots in its 2016 survey belong to European cities. Wrote Mr Cohen on fastcompany.com , “You may be surprised to learn that the highest-rated USA city on the Mercer ranking – San Francisco – was 28 th .” 2 Smart cities. For the rst time, last year President Barack Obama committed $160 million to support the development of smart cities in the USA. In contrast, the European Union has been pushing the smart cities agenda for about a decade. Just one of the funding mechanisms for smart cities in Europe committed $18 billion toward sustainable urban development between 2014 and 2020. 3 More rapid adoption of soft infrastructure for entrepreneurship. So-called Fab Labs are “maker spaces,” available to the community, which o er 3D printers, lasers, and other tools for tinkering and developing local products. Despite their origination with the Massachusetts Institute of Technology, Fab Labs in the USA total only 115 versus nearly 300 in Europe. Similarly, co-working facilities have blossomed in European cities. Barcelona alone has more than 300 such spaces; Philadelphia, with a population about the size of Barcelona’s, has only a dozen or so.

Image: www.bigstockphoto.com Photographer Zsolt Ercsel

34

www.read-eurowire.com

September 2016